Dutch MPs to vote on plan to reduce student loan interest rate

Dutch MPs will vote on Thursday evening to reduce the interest rate that students have to pay on their loans. According to NOS, a proposal by independent MP Pieter Omtzigt aimed at financing this rate reduction is likely to secure a majority in the Tweede Kamer, the lower house of the Dutch parliament.

This comes as students have expressed frustration with the new interest rate on student loans, which is set to be five times higher next year, increasing from 0.46 percent to 2.56 percent. Hundreds of students, graduates, and sympathizers demonstrated in The Hague on Wednesday to protest against the increase.

Omtzigt proposes reducing the tax break granted to international workers in order to cut the interest rate on student loans. He advocates for changes to the current 30 percent scheme, which allows highly educated foreign workers in the Netherlands to be tax-exempt on up to 30 percent of their wages for five years.

Starting from 1 January 2024, Omtzigt proposes to limit the 30 percent benefit to 20 months, followed by a 20 percent benefit for the next 20 months, and then a 10 percent benefit for the last 20 months. He asserts that the change will save around 200 million euros each year. This amount could be used to lower interest rates for students without a basic grant, but the exact reduction and its implementation timeline remain unclear.

This plan is co-submitted by GroenLinks-PvdA, ChristenUnie and Volt. The PVV, CDA, BBB, PvdD will probably vote in favor of the proposal on Thursday evening, according to NOS.

The loan-based financing system for students was introduced in 2015 and was abolished by the government this academic year in favor of reinstating the basic grant. Students who pursued their studies studies during this eight-year period under this system are referred to as "the unlucky generation."